Founded in 2011, NXTP Labs is an early-stage investment fund based out of Buenos Aires, featuring a regional accelerator program for LAC tech entrepreneurs modeled after Silicon Valley’s Y Combinator.

The fund, like Y Combinator, seeks to accelerate companies which have the potential to reach the vaunted “unicorn” status ($1 billion valuation). However, NXTP Labs’ mission also includes nurturing the entrepreneurial ecosystem in Latin America, therefore making it a perfect natural partner for the Inter-American Development Bank’s Multilateral Investment Fund (MIF).

NXTP Labs makes $25,000 investments (and larger follow-on investments of up to $1 million) in the region’s promising tech start-ups, and provides mentoring and advice to their entrepreneurs, as well as connections to a strong global network. The founders raised the fund’s first $2.5 million from their extensive personal network, which also provided mentorship to the program’s entrepreneurs. Subsequently, NXTP Labs graduated 50 start-ups from its program and achieved its first exit within its first 18 months of existence. The fund leveraged this early experience to raise additional capital in 2013, anchored by a $5 million investment from the MIF.

By mid-2015, NXTP Labs had closed the fund at approximately $38.5 million, and had already invested over $13.7 million in 164 companies across eight editions of its accelerator. Also, its nine exits had produced a combined multiple of invested capital (MOIC) of 4.74x, and the performance of its portfolio of tech start-ups had exceeded the firm’s performance projection by a wide margin (only 20% of its portfolio companies had been written off, instead of the anticipated 60%, so that 80% of the startups supported by the fund were growing). Moreover, high-potential and growing companies comprised more than half of the fund’s portfolio, creating the “happy problem” of having to raise additional capital for an unexpectedly high proportion of follow-on investments.

Therefore, when in early 2015 the MIF’s Market Innovation Lab and its Early Stage Equity Team partnered with Prof. Josh Lerner and Bella Research to carry out a detailed study of early stage VC funds in which the MIF had invested, NXTP Labs was one of the three funds selected to be included in the analysis. The study explored how the MIF financial and non-financial support of NXTP Labs ultimately impacted socioeconomic development in LAC:

By mid-2015 NXTP had graduated 397 entrepreneurs from its accelerator program, and supported the creation of 1,164 direct jobs. Moreover, its portfolio companies had experienced $35.5 million in revenue growth, and raised an additional $120 million in additional capital from other investors.

Given that NXTP Labs’ seed investment and accelerator model centers on providing intensive training and networking support to its portfolio companies alongside modest initial investments, it scored strongest in the networking and business training categories. However, it is worth noting that small initial investments are integral to the fund’s model, and have allowed it to support 160+ companies over its relatively short life.

NXTP Labs received modest impact scores in the ESG dimension, reflecting the early stage of its typical portfolio companies, and the fact that most early stage companies focus their efforts and resources on rapid growth. However, the fund supported the work of female entrepreneurs and created other important socially beneficial impacts, discussed in detail in the study.

In terms of ancillary growth and job creation, the research team found great variety across the fund’s portfolio, as some companies seemed to have a sizable indirect impact and spurred great economic activity in the region, while others did not appear to have a noticeable impact on this dimension.

Similarly, NXTP’s portfolio companies also varied greatly in terms of innovation, featuring both companies which created scalable products meant to compete in the global marketplace, and others which imported to the region models already tested abroad.

To invest in so many start-ups and achieve a healthy financial return, NXTP needed a deep pipeline of promising entrepreneurs, a strong community of mentors able and willing to guide them, and sufficient capital from investors excited to invest the region’s next generation of innovative businesses. Recognizing the importance of supporting, not one, but all of these parts of the ecosystem simultaneously, NXTP’s founders consciously nurtured the region’s start-up ecosystem, achieving a high impact score on this dimension.

Additionally, the study highlights some of NXTP Labs’ most impactful and innovative investments, such as:

Zolvers is a regional online marketplace for hiring pre-screened home cleaning and home repair professionals. As of August 2015 it served approximately 40,000 customers in Argentina, Chile, Mexico, and Colombia, and had approximately 10,000 individual service providers in its database. Because of its convenient platform and thorough screening process, Zolvers enables its service providers to find more stable and convenient work at higher hourly rates, helping some of them to double their monthly income.

Satellogicis in Argentinian aerospacial startup developing a constellation of nano-satellites to provide real-time high resolution satellite imaging of the entire globe, with the goal of improving data-based decision making in industries such as oil and gas, agriculture, and infrastructure. By mid-2015 the company had launched its first three nano-satellites, and planned to have a 16-satellite constellation in orbit by 2016.

Companies such as Satellogic are important, not only for the direct and indirect economic growth they spur, but also as role models—examples of LAC’s success in conceiving and operating global companies, which further contribute to strengthen the entrepreneurial ecosystem in the region (this demonstration effect in part motivated the MIF’s decision to invest in NXTP in the first place).